This post is submitted by our Guest Blogger Shaun Nichols. Shaun is the founder of debtconsolidationdetails.com where he writes articles on debt consolidation and other aspects of personal finance. Click here if you also want to write for EquiTipz.
Have you very often faced a situation where you needed cash urgently but there was no help in sight? If your answer is a yes, then you should perhaps start thinking about setting up an emergency fund. Yes, you always knew its importance, now it’s time to create one for yourself. Be it an urgent need for cash or pulling yourself out of debt, it is always wise to be prepared for emergencies.
Perhaps, the saying â€œprevention is better than cureâ€ applies most aptly to a financially strapped situation. Read on to know how you can bail yourself out of such an emergency.
1) Begin with a small savings account: Whoever told you that emergency fund account got to be started big was utterly wrong! The idea is to start small. Open a savings account and deposit whatever you can regularly. The important thing is to make a habit of contributing something towards it frequently.
2) Go the traditional way: Isolate the emergency fund and make it your most important priority. Use every cent to boost your emergency savings. After paying off your bills each month, determine to set some money aside for your emergency account. A decent fund is generally equivalent to 3 to 6 month’s worth of expenses.
3) Try the frugal path: You longed for that $150 jeans at the supermarket? Well, drop the idea for the time being. Yes, curb your unnecessary expenditure and use the money to make your emergency fund healthier. Purchasing things like video games, gadgets, magazines etc. should never be on your priority list.
4) Add it to your list of bills: It takes determination but treating your emergency fund as your bill would greatly help to increase your savings. Imagine it is your payday when you have to clear your bills before you can take care for other variable expenses. The increment in your savings this way would help you to stick to your decision.
5) Make use of financial windfalls: If you have been lucky to receive a tax return or a bonus from work, don’t get tempted to spend it all at once. Instead, make use of such windfalls to fill up your emergency fund. You might want to spend a part on yourself, but make sure that the rest of it makes it to your fund.
Also Read: The Importance of Investing
6) Use a piggy bank: Get a piggy bank or anything good enough where you can safely keep your money. Whenever you get a chance, put something into this piggy bank. For example, at the end of the day you can empty your purse of all the change and use it to fill your piggy bank.
7) Sell sell sell! : Make a list of all the items that you own and get rid of the clutter from your house once in a while. You might want to sell these off on eBay or some other website. Save your earnings from these for your emergency fund.
8 ) Most importantly, stay focused: Most of the times people give in to their temptations. To save your money, you have to sacrifice on little pleasures like eating out, going for movies and the like. You can stay focused by looking at the positive aspects of your doings. Overcoming temptation makes you stronger. Also, giving in to such allurements once in a while doesn’t harm and, in fact, helps you to stay focused.
So, stop making excuses and get geared to start an emergency fund from today itself. This is the best way to be prepared for a rainy day. Sure, you do not want to rely on credit cards for emergencies and push yourself all the more into the hole!
Also Read: 8 Mistakes to Avoid When Using a Credit Card